It’s not such a foolish idea, reckons Nash from VesselsValue. “Container rates were outrageous but they’ve been correcting since September and there’s talk of hitting pre-pandemic levels,” he said.
That’s also good news for European car companies shipping parts from China. “The cost has come down tremendously,” Tesla CFO Zachary Kirkhorn said on the company’s third quarter earnings call. “The cost of a container on the spot market from Shanghai got as high as $20,000. Now it’s $3500-$3600.”
Containers are not a long-term solution for cars, though. Compared with the hassle of driving cars into individual containers, a roll-on, roll-off ferry is a lot more efficient.
However, it’s not just shipping that’s experiencing problems. The ports themselves are struggling. Leading global car-carrier operation Wallenius Wilhelmsen has said it won’t handle any car exports out the German port of Bremerhaven for October and November, and possibly December too because of excess congestion. The port is suffering a lack of drivers to move cars and containers, affecting many car makers, including BMW, which is facing a three-month delay to move excess stock, CNBC reported.
The driver shortage is also preventing manufacturers from moving finished cars across Europe. The mismatch is hampering car makers as production increases following greater chip availability. For example, Stellantis’s production numbers rose by 25% in the third quarter this year, but shipments went up by only 14%, hitting the bottom line.
“At the moment, we can’t build enough cars and the ones we are building in Europe we’re struggling to get to the point of sale,” Stellantis CFO Richard Palmer said on the company’s third quarter earnings call.
The shipping squeeze is likely to be easier for companies with close ties to shipping companies such as Hyundai Motor, which owns Glovis. However, even Glovis was forced to charter the Grimaldi ship Grande Abidjan last month, at a cost of $99,000 per day, according to VesselsValue data.